Tata, an Indian conglomerate (the same guys who built the $2000 car), is generating headlines by building apartments of about 400 sq. ft (see plan on left) and selling them for about $10,000.
Much of the commentary seems to indicate that this is too small ("even for Manhattanites") and that it would be impossible to squeeze a family of four in these.
But here is the thing: this 400 sq. ft apartment is bigger than the one that we lived in when I went to high school (albeit a family of 3, not 4). My parents rent out parts of a house they own in Chennai; those units are also around 400 sq. ft. and are typically occupied by families with children.
I remember when we'd just bought our (first) home in the USA and my dad asked me how large it was. "1800 sq. ft.," I told him to total silence on the other end. "Isn't that a bit extravagant?," he finally asked.
Once they'd visited us here, they realized that it was a quite reasonable size. For America. 400 sq. ft apartments are also a reasonable size. For India. The expectations of sound, cleanliness, privacy, neighbors, etc. are completely different in the two countries. So, yes, it is certainly possible to live a good, fulfilling life in apartments that "cramped".
I've lived in both a 300 sq. ft. home in India and a 3500 sq. ft. home in the US. I don't think one's inherently better than the other -- it really comes down to the way home life is organized in the two countries.